Gov. Mike Pence's administration began making the case Monday for possible changes in the state's tax structure.
Department of Revenue Commissioner Mike Alley presented a summary of Pence's tax conference held earlier this year to members of a legislative tax study committee. Alley talked about a slew of options for overhauling who pays for government services, including a possible expansion of what is included in the state sales tax.
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The discussion — which was largely rote and focused on analysis of where Indiana stands at the moment instead of where Pence would like to take it — only occasionally veered into what Pence might propose in the upcoming legislative session. At one point Alley noted that it would be possible to offset an expansion of the sales tax to goods like groceries — which would affect poorer residents the most — with an expansion of the tax to services.
"We know that the more affluent typically consume more services — that would be more progressive, than regressive, in that regard," Alley told the panel of state lawmakers, lobbyists and tax experts.
One of the few things Pence has been specific about is seeking a "simplification" of the state's tax code, something his tax team talked about as well at Monday's meeting. Alley noted that the number of exemptions, deductions and tax credits that individual residents can take on their state tax return leads it to be much more complicated than filing a simpler federal tax return.
The broad discussion of Indiana's tax system comes as tax collections have slowed to a crawl for the state. Tax collections for 2014 came in slightly under what the state collected in 2013 and a dour prediction for next year led Pence's budget team to alert lawmakers that state agencies and universities would face cuts again unless tax collections improve.
The early discussion also mark a new tactic for Pence, who has struggled to win his choices for tax cuts from the General Assembly in each of his first two sessions. Pence submitted loosely defined 2013 and 2014 legislative agendas, which focused largely on cuts to the state's income tax and a call to eliminate its tax on business equipment. But legislative leaders chafed at the proposals, in part because lawmakers were largely kept out of the creation of those measures, and altered them drastically to approve tax cuts they were seeking.
Lawmakers return in January for a four-month session during which they will consider the state's next two-year budget.